A Brief of History of Federal Spending

Prior to the Great Depression, balanced budgets were a reasonably common occurrence in Washington. Since 1950, however, the federal budget has risen exponentially. In 1950, the percentage of budget-to-GDP shot up to 120%. The percentage fluctuated for several decades with peaks during the mid-1980s and late 2000s. Meanwhile, the percentage of federal debt held by the public fluctuated rather widely but remained on a generally upward path.

Throughout this time, the budget grew in size and complexity. Before the 1940s, only two committees — one in the House and one in the Senate — had responsibility over appropriations. But after the war and following the end of the Great Depression, larger spending at home and on the military led to the creation of various appropriations committees.

By the 1950s, the Social Security Administration, as well as other entitlement programs like Medicare and Medicaid, had been created and added a significant amount of spending to the deficit. In the 1980s, deficits rose again during the Cold War. Although the 1980s were characterized by a tax-cutting groundswell in Congress, spending, particularly on the Pentagon and entitlements, rose significantly — as a result, so did the deficit and debt.

Throughout the 1990s, the economy was generally strong, although all was not well. Overseas spending had gone down as the Cold War ended, but spending habits overall had not necessarily changed. Congress had regularly dipped into the Social Security trust fund, endangering the future health of these programs and running up a bill that, as of 2016, was pushing $3 trillion.

Beginning not long after 2001, the new “Global War on Terror,” including full-scale wars in both Afghanistan and Iraq and the creation of the Department of Homeland Security, pushed spending to ever-higher levels, as entitlements and domestic spending remained a significant concern.

Federal spending has grown dramatically over time, and with it the size and scope of the government. While we may not see government spending shrink to its historical lows anytime soon, there are ample opportunities for bipartisan reform that both sides can and should seek, particularly given looming budget shortfalls and economic strains caused by ever-rising spending and debt.